The Quoddy Tides

Eastport, Maine

2006 December 22

Quoddy Bay, Downeast LNG file with FERC

by Edward French

Two companies seeking to build liquefied natural gas (LNG) import terminals on Passamaquoddy Bay filed their formal applications with the Federal Energy Regulatory Commission (FERC) within a week of each other. Quoddy Bay LNG, which is proposing a facility at Split Rock, Pleasant Point, filed on December 15, and Downeast LNG, which proposes an import terminal at Mill Cove in Robbinston, followed a week later, on December 22. Downeast LNG also filed applications with state officials under Maine's Natural Resources Protection Act and Site Location of Development Law. Quoddy Bay hopes to submit applications to state agencies in early 2007.

FERC staff now will issue a notice on its website at <www.ferc.gov> seeking public comment and requests for intervenor status within the next week for Quoddy Bay and sometime after that for Downeast LNG. The comment period for each project will extend for approximately 20 days. Intervenors will have the right to appeal FERC's decision either through FERC or a U.S. court of appeals.

According to Tamara Young-Allen, spokesperson for FERC's Office of Energy Projects, there will be more opportunities for public comment when the FERC staff begins its environmental review. Although FERC has held some public scoping sessions during the pre-filing process, she is not sure they will be conducted during the formal application process. The pre-filing process included a review of the environmental information that is included in the formal application and gave the public an opportunity to find out about the proposed facilities and the environmental issues that may arise. Also, draft resource reports were reviewed by FERC staff.

After an initial round of comments, FERC will prepare a draft Environmental Impact Statement (EIS) that will be open for further comments before a final EIS is issued for each project. The cases will then be ready for a decision by the five FERC commissioners. The commissioners, who are appointed by the president, include three Republicans, one independent and one Democrat. No more than three of the commissioners can be from the same party. Young-Allen estimates that a decision should be made within 10 to 18 months from the date of receiving the formal applications.

There are five existing LNG terminals in the U.S., and 16 more terminals have been approved by FERC. Presently 12 LNG proposals are pending before FERC, with about 40 proposals either pending or being discussed by the LNG industry for North America. According to FERC's website, even if an LNG terminal receives all federal and state approvals, "it still must meet complicated global issues surrounding financing, gas supply and market conditions. Many industry analysts predict that only 12 of the 40 LNG terminals being considered will ever be built."

Among the groups that are planning to file for intervenor status are the three alliance members of Save Passamaquoddy Bay, which are opposed to the LNG projects, the Maine State Planning Office, and the Roosevelt Campobello International Park Commission, along with other organizations and agencies. "The realities of the developers' problems with their proposals will become obvious now, as facts replace spin," says Linda Godfrey, coordinator of Save Passamaquoddy Bay-U.S. "FERC has yet to accept these applications, and, even if they do, they face insurmountable obstacles regarding need, safety, alternatives and environment."

The City of Eastport and the Eastport Port Authority also are expected to file to be intervenors in the Quoddy Bay proceedings, according to Eastport City Manager George Finch. "It's not that we're pro or con, but we need to protect the interests of the city," he says.

In addition to the FERC permit, the U.S. Coast Guard must approve a ship operating plan for LNG carriers coming to and from the terminal, and various state permits need to be issued. Certain Canadian officials have asked to provide input into the FERC review process, and their comments also will be considered by U.S. officials.

In addition, at a recent port safety forum in Eastport, tribal officials stated that they will be working with the Coast Guard on LNG ship safety issues, according to Pleasant Point Passamaquoddy Governor Rick Doyle. Since aboriginal rights to the saltwater for transportation and sustenance were not considered in the Maine Indian Claims Settlement Act of 1980, Doyle says the tribe will be part of the discussions on how the bay is managed. "The tribe will be working cooperatively with anyone so that all of our lands are safe," says the Passamaquoddy governor.

Along with seeking federal and state approvals, Quoddy Bay LNG is looking to obtain a tax exemption agreement from the Passamaquoddy Joint Tribal Council. The joint council took no action on the Project Coordination and Tax Agreement at its December 13 meeting, although there was considerable discussion, according to Doyle. "It's up to the tribe to decide if they want to continue the discussions," says Doyle. Last February the joint council had voted to turn down the tax agreement, which calls for the exemption of real and personal property taxes and the reduction of the Tribal Employment Right Ordinance (TERO) tax for Quoddy Bay. The tax exemption provisions would be in exchange for lease payments to Pleasant Point amounting to an estimated $12 million per year once the proposed LNG facility is fully operational.

The joint council also took no action on a proposal from Quoddy Bay to purchase 300 acres of land west of the Old Eastport Road in Perry for $1.5 million. Quoddy Bay proposes to use the land as a storage and staging area during the construction process. Although it has been pointed out that the land has a significant amount of rock that could be turned into aggregate, or crushed stone used in construction, which could make the land worth considerably more, Quoddy Bay LNG Project Manager Brian Smith says the company would not be removing aggregate from the land. He notes, "We will have too much excavated material at the existing [LNG terminal] site."

Quoddy Bay, though, has obtained an option to purchase a 30-acre parcel at the corner of Route 1 and Route 190 as a site for temporary lodging for construction workers. The actual purchase will depend on the financing of the project, says Smith, but the company needs to start preparing for possible construction if the project is approved. Any permits for the lodging, including local permits, will be sought as part of the overall LNG project.

During the three-year construction period, an average of 735 workers would be needed, according to Quoddy Bay, and Smith says the company expects that "hundreds of workers" will commute from local communities. Along with construction workers, Quoddy Bay would hire dozens of non-construction workers, such as chefs, servers, housekeepers and administrative staff, at the modular housing facility throughout construction. The facilities would include indoor and outdoor recreational facilities, a large dining room, a café, laundry facilities, private security and enough rooms for those who decide to stay in the temporary modular housing. Smith notes that Quoddy Bay would remove all structures from the site after construction is completed.

Quoddy Bay LNG project

Smith says he is "very confident" that the project will be approved by FERC because of the input received from FERC and local stakeholders during the pre-filing process. "We got a lot of feedback already that's been very positive."

"Unlike many other prior applicants for such licenses, Quoddy Bay has had the advantage of having a thorough review process by FERC before filing its formal application," says Smith. "This new FERC process has been a success from our perspective and we've been able to incorporate all the comments received from FERC, other federal and state agencies and stakeholders throughout the region into our formal filing."

Quoddy Bay LNG's 2.0 billion cubic feet per day LNG import, storage and regasification facility proposal includes a pier extending from Split Rock, two vessel berths, and a regasification process platform; the Split Rock support facility on the reservation, which includes a control building, office and warehouse; the LNG transfer pipelines and vapor return line, which would connect the pier to the onshore storage and regasification facility that includes three storage tanks, electric generation equipment and a regasification facility on land in Perry. The proposal also includes a 35.8 mile pipeline from the LNG terminal to the Maritimes & Northeast natural gas pipeline in the town of Princeton. The Maritimes and Northeast Pipeline expansion for the Quoddy Bay Project is detailed in a report prepared by Maritimes & Northeast Pipeline and submitted to FERC in September.

Quoddy Bay LNG is aiming to begin operations by the winter of 2009-2010.

Downeast LNG project

Downeast LNG's application to FERC is for an LNG import terminal in Robbinston and a 31 mile pipeline that will connect to the Maritimes & Northeast Pipeline at Baileyville.

"This is a major milestone for our project, and we are grateful to local residents and members of our team who have helped us keep this project moving forward," said Dean Girdis, president of Downeast LNG, in a prepared release. "This is a safe, environmentally sound project and we are confident that it will be approved after a rigorous review by FERC and other federal and state agencies."

The proposed facility would consist of two storage tanks, a regasification plant and a pier to receive LNG carriers. The facility would have a storage capacity of 320,000 cubic meters, with an output capacity of 500 million standard cubic feet per day (mmscfd) and peaking capacity of 625 mmscfd. The proposal also includes a 31-mile pipeline that would connect the facility to the Maritimes and Northeast Pipeline that runs from Nova Scotia through Maine to southern New England.

Downeast LNG hopes to have all of its approvals in hand by the end of 2007 and to begin construction by late 2007 or early 2008. Girdis hopes that the terminal facility and pipeline connection would be ready to receive LNG shipments by late 2010 or early 2011.